National Textile Corporation to be put on the block soon

With a trimming of its size and recurrent cash infusions failing to make the state-run National Textile Corporation (NTC) operationally viable, the Centre is finally putting the loss-making company on the block. All through the last two decades and more, NTC has been incurring losses, but it made a technical profit of Rs 969 crore in FY17 as it accounted for the capital gains from the sale of a clutch of prime properties and land parcels in Mumbai and elsewhere.

Over the decades, several revival plans have been implemented for the manufacturer of yarn and cloth but none of them actually helped it to stay afloat in a competitive market. In the process, several unviable units were closed down.

“Post-privatisation, NTC will benefit from new technologies and capital to be brought in by the private investor. This may help the firm to fully utilise capacity as well as expand businesses,” an official said, adding that Cabinet approval would be sought for the sale soon.

With unavailability of working capital and other financial constraints, operations at NTC mills are now under suspension. Employees are, however, being paid wages and statutory dues as per an agreement between management and workers’ unions. Currently, NTC has 23 mills and as many as 7,825 employees on its payroll.

The latest attempt to revive the corporation was through 2012 package recommended by the then Board for Industrial and Financial Reconstruction (BIFR). Around Rs 5,500 crore was spent under the package towards meeting various expenses like clearing up outstanding statutory dues, one time settlements (OTS) with financial institutions, interest payment and compensation under modified VRS. Moreover, NTC has spent Rs 1,646 crore on the modernisation of its mills under the revival scheme. However, despite such an infusion of funds, the Corporation has not been operationally profitable, partly due to the rise in raw material costs.

In FY20, the latest year for which financials are available, the company reported a net loss of Rs 350 crore, up 13% on year. The turnover of the company during FY20 stood at Rs 850 crore, a decline of 21% on year. Its net worth also fell by 20% on year to Rs 1,381 crore in FY20.